Delhi District Court
Madan Lal Suresh Kumar vs Sanjay Kumar on 3 October, 2018
Page 1 of 13
IN THE COURT OF MS. SNIGDHA SARVARIA : MM : NI ACT-03
(CENTRAL) : TIS HAZARI COURTS : DELHI.
CC No.523560/16
DATE OF INSTITUTION : 20.12.2011
DATE RESERVED FOR JUDGMENT : 26.09.2018
DATE OF JUDGMENT : 03.10.2018
IN THE MATTER OF:
M/s Madan Lal Suresh Kumar,
Through its Proprietor
Sh. Suresh Kumar,
192, Katra Nawab,
Chandni Chowk,
Delhi-110006.
........Complainant
VERSUS
Sh. Sanjay Kumar,
M/s S. K. Cloth Emporium,
Shop no.14, Ratia Marg,
Sangam Vihar,
New Delhi-110062
..........Accused
JUDGMENT :-
a) Srl. No. of the case & Date of institution:3047/12 & 04.01.2012
b) Date of commission of offence : On the 15th day of receiving of statutory legal demand notice.
c) Name of the complainant : M/s. Madan Lal Suresh Kumar d) Name of the accused : Sanjay Kumar e) Nature of offence complained of : S. 138 NI Act f) Plea of the accused person :Accused pleaded not guilty h) Final Order : Convicted. i) Date of order : 03.10.2018. CC No. 523560/2016 Madan Lal Suresh Kumar vs Sanjay Kumar Page 2 of 13 COMPLAINT UNDER SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT, 1881
BRIEF STATEMENT OF REASONS FOR DECISION OF THE CASE:-
JUDGMENT:
Brief facts
1. The brief facts of the present complaint filed U/s. 138/142 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "NI Act") are that Mr. Suresh Kumar who has filed and instituted the present complaint, is the Proprietor of the complainant firm / concern and is well conversant with the facts of the present case. The accused is also engaged in the same outlet retail business of cloths and is running his business in the name and style of M/s S. K. Cloth Emporium. On 21.02.2011 and on 26.03.2011, the accused approached the wholesale shop of complainant to purchase cloths for business purpose and the accused purchased suiting cloths in the following matters:
On 21.02.2011 against Credit Memo no.42214 for Rs.45,274/-. On 26.03.2011 against Credit Memo no.42500 for Rs.3750/-.
2. In discharge of his liability, the accused issued following two post dated cheque :
Cheque no.371427 dated 21.05.2011 for Rs.45,274/-. Cheque no.371426 dated 26.05.2011 for Rs.3,750/-. Both the above cheques are favouring M/s Madan Lal Suresh Kumar issued from accused's saving account no.0148-Z62097-001 drawn on IndusInd Bank, Lajpat Nagar Branch, Ravissance House, Ist Ring Road, Lajpat NagarIV, New Delhi-110024. The above said cheques were presented on 01.11.2011 for encashment / realization with the banker of complainant firm namely Punjab National Bank, Katra Mohan, Chandni CC No. 523560/2016 Madan Lal Suresh Kumar vs Sanjay Kumar Page 3 of 13 Chowk, Delhi in the current account no.0116008700000504 of the firm M/s Madan Lal Suresh Kumar, but the aforesaid cheques were dishonoured by the banker of accused with remarks "Account Blocked", which was intimated to the complainant firm with its cheque returning memo dated 02.11.2011 and 03.11.2011. On phone, the accused assured the complainant firm to make the entire payment of dishonoured cheques with interest within a day or soon but the accused failed to pay the same. Thereafter, the complainant issued legal notice dt.26.11.2011 u/s 138 NI Act to the accused by registered AD as well as through courier. The notice was duly served upon the accused but the accused did not comply with the said notice and failed to make the said payment within 15 days of receiving the said legal demand notice and thereafter, complainant filed the present case. Therefore, it is stated that the accused is liable for the commission of the offence U/s. 138 of the NI Act.
Proceedings Before Court
3. The present complaint was received by way of assignment on 20.12.2011.
Summons were issued against the accused person. The accused entered appearance and notice of accusation was framed against the accused on 11.10.2012 to which accused pleaded not guilty and claimed trial. The defence of the accused was also recorded wherein he stated that he neither issued the cheque in question nor signed the cheque in question. He denied receiving legal demand notice. He stated that he has paid all the dues in full and final settlement to agent Hari Shankar in cash. He stated that the present complaint is fabricated.
4. In support of his case, the complainant examined himself and deposed on the same lines as his complaint and proved his affidavit in evidence as Ex CW1/A; cheque bearing no. 371427 dated 21.05.2011 for Rs. 45,274/- drawn on IndusInd Bank, Lajpat Nagar Branch, Ravissance House 1st Ring Road, Lajpat Nagar IV, New Delhi-110024 as Ex CW1/1; cheque bearing no. 371426 dated 26.05.2011 for Rs. 3,750/- drawn on IndusInd CC No. 523560/2016 Madan Lal Suresh Kumar vs Sanjay Kumar Page 4 of 13 Bank, Lajpat Nagar Branch, Ravissance House 1st Ring Road, Lajpat Nagar IV, New Delhi-110024 as Ex CW1/2; return memo dated 02.11.2011 as Ex CW1/3; return memo dated 03.11.2011 as Ex CW1/4; legal notice dt. 26.11.2011 as Ex CW1/5; registered AD post as Ex CW1/6; blaze flash courier receipt as Ex CW1/7; undelivered courier envelope as Ex CW1/8; credit memo nos. 42214 dated 21/02/2011 for Rs. 45,274/- as Ex CW1/9 and credit memo no. 42500 dated 26/03/2011 for Rs. 3,750/- as Ex CW1/10. Cw1 was cross-examined by the accused. Complainant closed complainant evidence on 15.09.2015.
5. Statement of accused under S.313/281 CrPC was recorded on 20.11.2015 and the accused in statement u/s 313 Cr.P.C stated that the cheque in question does not belong to his account. He did not sign the cheque in question and he did not receive the legal demand notice.
6. Accused examined himself as DW1 and he was cross-examined by the complainant. DW Jaspreet Singh from IndusInd bank who proved statement of account Ex DW1/A colly. The accused closed his evidence on 02.03.2017.
7. I have heard counsel for the parties, perused the record and have gone through the relevant provisions of the law.
Findings
8. The following are the components of the offence punishable under Section 138 Negotiable Instrument Act:-
(1) drawing of the cheque by a person on an account maintained by him with a banker, for payment to another person from out of that account for discharge in whole/part any debt or liability, (2) presentation of the cheque by the payee or the holder in due course to the bank, (3) returning the cheque unpaid by the drawee bank for want of sufficient funds to the credit of the drawer or any arrangement with the banker to pay the sum covered by the cheque, (4) giving notice in writing to the drawer of the cheque within 15 days of the receipt of information by the payee from the bank regarding the return of the cheque as unpaid demanding CC No. 523560/2016 Madan Lal Suresh Kumar vs Sanjay Kumar Page 5 of 13 payment of the cheque amount, (5) failure of the drawer to make payment to the payee or the holder in due course of the cheque, of the amount covered by the cheque within 15 days of the receipt of the notice.
9. The contention/defence of the counsel for accused that the present complaint is not maintainable since the complainant did not serve statutory demand notice Ex CW1/5, is without any merits as the said legal demand notice was sent at the same address as the address of the accused mentioned in the notice framed on 11.10.2012. Ad card has not been received back to the complainant thus, presumption under S. 27 of General Clauses Act, 1897 is raised that the legal demand notice was deemed to be served upon the accused.
10. Also, the said objection cannot be taken at this stage in view of the decision in C.C. Alavi Haji v Palapetty Muhammad & Anr. (2007) 6 SCC 555, which states that in case, drawer of the cheque raises an objection that he never received Legal Notice U/s 138 of N.I. Act, he can within 15 days of the receipt of summons make payment of the cheque amount and in case, he does not do so, he cannot complain that there was no proper service of Legal Notice U/s 138 of N.I. Act. Hence, in view of the Judgment in C.C. Alavi Haji, the presumption of service of Legal Notice has arisen if not of the legal demand notice sent vide registered post then through issuance of summons by the court.
11. It is stated by the accused that he did not fill the details on the cheques in question Ex CW1/1 & Ex CW1/2. At this juncture it would be worthwhile to discuss the provisions under S. 20 and S. 118 of the Negotiable Instruments Act, which is as under:
20.Inchoate stamped instruments. Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in [India], and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as then case may be, upon it a negotiable instrument, instrument, for any amount CC No. 523560/2016 Madan Lal Suresh Kumar vs Sanjay Kumar Page 6 of 13 specified therein and not exceeding the amount covered by the stamp.
The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount, provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder.
118. Presumptions as to negotiable instruments of consideration Until the contrary is proved, the following presumptions shall be made:
(a) of considerationthat every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;
(b) as to date that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance that every accepted bill of exchange was accepted within a reasonable time after its date its date and before its maturity;
(d) as to time of transfer. that every transfer of a negotiable instrument was made before its maturity;
(e) as to order of endorsements that the endorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
(f) as to stampsthat a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course that the holder of a negotiable instrument is a holder in due course; provided that, where the instrument has been contained from its lawful owner, or form any person in lawful custody thereof, by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.
12. Further, in Mojj Engineering Systems Limited & Ors. Vs. A.B. Sugars Ltd.; 154 (2008) Delhi Law Times 579, the Hon'ble Delhi High Court had observed as under :-
"7. Even otherwise, prima facie, it was the petitioners who had handed over the undated cheque for a certain amount to the respondent in terms of a contract between the parties. Since an undated cheque cannot be encashed, it can only mean that the petitioners had authorized the complainant to enter an appropriate date on it. In Young Vs. Grote (1827) 4 Bing. 253 it was held that when a blank cheque is signed and handed over, it means the person signing it has given an implied authority to any subsequent holder to fill it up. Similarly, in Scholfield Vs. Lord Londesborough (18951899) All ER Rep 282 it was held that whoever signs a cheque or accepts a bill in blank, and then puts it into circulation, must necessarily intend that either the person to whom he gives it, or some future holder, shall fill up the blank which he has left. This common law doctrine was also affirmed by Justice Macnaghten in Griffiths Vs. Dalton [1940] 2 KB 264 where it was held that the drawer of an undated cheque gives a prima facie authority to fill in the date. This aspect has also been incorporated in Section 20 of the Negotiable Instruments Act, which deals with Inchoate Stamped Instruments. The Supreme Court in T.Nagappa Vs. Y.R.Murlidhar, (2008) 5 SCC 633 while discussing the scope of Section 20 held that by reason of this provision, a right CC No. 523560/2016 Madan Lal Suresh Kumar vs Sanjay Kumar Page 7 of 13 has been created in the holder of the cheque. Prima facie, the holder thereof is authorized to complete the incomplete negotiable instrument. In that view of the matter, all further issues that may be raised by the petitioners regarding the nature and scope of the authority of the respondent to put any particular date on the cheque in question, are all matters for trial.
8. It is not as if the cheque came to be issued without any consideration whatsoever in the first place or that there was such a glaring defect in the complaint that the decision of the Trial Court to issue summons has ex facie resulted in miscarriage of justice or an abuse of the process of Court, and therefore interference under Section 482 Cr.P.C. to quash the proceedings is warranted in the interest of justice. The question whether the consideration for which the cheque was issued was ultimately satisfied or whether the cheque was wrongly sought to be encashed, are all issues that must also be decided at the trial. The Supreme Court in the case of M.M.T.C. Ltd. and Another Vs. MEDCHL Chemicals and Pharma (P) Ltd. and Another,(2002) 1 SCC 234 held as follows:
"13.....the wellsettled law that the power of quashing criminal proceedings should be exercised very stringently and with circumspection. It is settled law that at this stage the Court is not justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the complaint. The inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice. At this stage the Court could not have gone into merits and/or come to a conclusion that there was no existing debt or liability."
The Court further held that:
"17. There is therefore no requirement that the complainant must specifically allege in the complaint that there was a subsisting liability. The burden of proving that there was no existing debt or liability was on the respondents. This they have to discharge in the trial. At this stage, merely on the basis of averments in the petitions filed by them the High Court could not have concluded that there was no existing debt or liability."
13. From the aforesaid discussion, it is manifest that by reason of the provision under S. 20 NI Act, a right has been created in the holder of the cheque. Prima facie, the holder thereof is authorized to complete the incomplete negotiable instrument.
14. The defence of the accused is that he did not issue the cheques Ex CW1/1 and Ex CW1/2 and that the said cheques do not bear his signatures and that he has paid all the dues in full and final settlement to agent Hari Shankar in cash. He stated that the present complaint is fabricated. The accused in his defence recorded on 11.10.2012 and in his statement as DW1 recorded on 02.03.2017 has stated that he has already made CC No. 523560/2016 Madan Lal Suresh Kumar vs Sanjay Kumar Page 8 of 13 payment in cash but in the cross-examination of complainant/CW1 a suggestion was put that the accused has neither purchased any goods from the complainant nor had issued the cheques in question to the complainant, which is contrary to the defence set up on 11.10.2012. To prove that the accused had paid for the purchases made in question to agent Hari Shankar has not produced Hari Shankar in the witness box. Thus, from the aforesaid the version of the accused is not believable that he had paid for the purchases made vide Ex CW1/9 and Ex CW1/10.
15. As regards the defence of the accused that he did not sign and issue the cheques Ex CW1/1 and Ex CW1/2 he has examined DW Jaspreet Singh, Operation Manager, IndusInd Bank, GK-II Branch who stated that the account no. 0148Z62097001 (of which cheques Ex CW1/1 and Ex CW1/2) is non-operative account for the account holder did not complete the formalities of account opening and has no record of this account and the account was never activated by Tatkal kit was issued by the relationship officer. He proved the statement of account Ex DW1/A colly and stated that the cheques issued were dishonoured for the account holder issued the cheques without account activation and balance. He stated that the bank neither has KYC form of account holder nor any identity proof of account holder and bank is not aware who has issued the cheques in question.
16. From the testimony of DW Jaspreet Singh it is apparent that the bank is not aware as to who is the account holder of account no. 0148Z62097001 (of which cheques Ex CW1/1 and Ex CW1/2), which is an un-activated account. As per the complainant the accused signed/issued the cheques in question. On perusal of the signatures of the accused on his bail bonds furnished on 12.10.2012; vakalatnama of Advocate Mr. Suman Singh and Advocate Mr.Aniruddha S De & Advocate Mr. J.K. Verma; applications for cancellation of NBW's issued against the accused, which are part of judicial record and also the signatures on the cheques in question Ex CC No. 523560/2016 Madan Lal Suresh Kumar vs Sanjay Kumar Page 9 of 13 CW1/1 and Ex CW1/2 by virtue of provisions under S. 73 Indian Evidence Act it is easily inferable that the signatures on the cheques Ex CW1/1 & Ex CW1/2 and on his bail bonds furnished on 12.10.2012; vakalatnama of Advocate Mr. Suman Singh and Advocate Mr. Aniruddha S De & Advocate Mr. J.K. Verma; applications for cancellation of NBW's issued against the accused, which have signatures of the accused are all signed by the accused. Once, the signatures on the cheques in question have been proved to be of the accused it is apparent that the cheques in question were issued by the accused to the complainant and version of the complainant is thus, believable and the version of the accused is unbelievable from the point of view of an ordinary prudent man.
17. Once it is held herein above, that the cheques in question Ex CW1/1 & Ex CW1/2 have been signed by the accused, thus, presumption under S. 139 NI Act comes into operation. In Rangappa v. Sri Mohan AIR 2010 SC 1898 it was observed by the Hon'ble Supreme Court as under :
"14. In light of these extracts, we are in agreement with the respondentclaimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the CC No. 523560/2016 Madan Lal Suresh Kumar vs Sanjay Kumar Page 10 of 13 presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own. "
(emphasis added)
18. In view of the decision in Rangappa laid down by the Supreme Court, the presumption raised under Section 139 of the NI Act is of legally enforceable debt or liability and it is for the accused persons to raise a probable defence to rebut the presumption.
19. Section 139 NI Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the NI Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 NI Act is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Sectoin 138 NI Act can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong those impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant accused cannot be expected to discharge an unduly high standard of proof.
20. The reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139 NI Act, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. The accused can rely on the materials submitted by CC No. 523560/2016 Madan Lal Suresh Kumar vs Sanjay Kumar Page 11 of 13 the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own.
21. As discussed herein above, under S. 139 NI Act strong rebuttable presumptions in favour of the complainant arise but same can be rebutted by the accused by way of credible defence.
22. As per S. 103 of Indian Evidence Act burden of proof means that a party has to prove an allegation before he is entitled to a judgment in his favour. Sectuib 103 of Indian Evidence Act provides that burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence, unless it is provided by any special law that the proof of that fact shall lie on any particular person. The provision of Section 103 of Indian Evidence Act amplifies the general rule of Sectoin 101 of Indian Evidence Act that the burden of proof lies on the person who asserts the affirmative of the facts in issue. In the present case as well, the onus was upon the accused to establish that he had no liability towards the complainant. The accused has not produced evidence of any handwriting expert witness to show that his signatures do not match with the signatures on the cheques in question. Why he has not got his signatures examined from a handwriting expert has also not been explained by the accused. The accused has also not brought his books of account/ledger books to show that he has paid for the transactions in question. The agent through whom accused allegedly paid the complainant for the goods purchased/transaction in question has not been examined. Also, it has come in the testimony of DW Jaspreet Singh that another case qua a different cheque from the same inoperative account for offences under S. 138 NI Act another case against the accused is pending but accused has not shown as to why qua the bank account no. 0148Z62097001 and cheques issued qua the said bank account of IndusInd Bank accused has been stated to be the account holder by the complainant and why the CC No. 523560/2016 Madan Lal Suresh Kumar vs Sanjay Kumar Page 12 of 13 amount on the cheques in question and the credit memos qua accused match when it has not even been alleged by the accused that the complainant is inimical towards the accused. These, lead to raising of an adverse inference against the version of the accused. Thus, clearly, the accused has failed to raise a probable defence and has failed to rebut the presumption raised U/s 139/118 of the NI Act.
23. Since the accused has failed to rebut the presumption raised U/s. 118/139 of the NI Act, there is no need to go into complainant's evidence for proving the complainant's case. There is nothing coming out in the cross examination of complainant's witness which would probabilise the defence raised by the accused or falsify the case of the complainant. Therefore, the complainant has been able to prove its case beyond reasonable doubt.
24. The complainant has been able to prove that the cheque in question i.e. bearing cheque bearing no. 371427 dated 21.05.2011 for Rs. 45,274/- drawn on IndusInd Bank, Lajpat Nagar Branch, Ravissance House 1st Ring Road, Lajpat Nagar IV, New Delhi-110024 as Ex CW1/1; cheque bearing no. 371426 dated 26.05.2011 for Rs. 3,750/- drawn on IndusInd Bank, Lajpat Nagar Branch, Ravissance House 1st Ring Road, Lajpat Nagar IV, New Delhi-110024 as Ex CW1/2 was issued in discharge of legally recoverable liability owed to the complainant by the accused.
25. Therefore, the accused Sanjay Kumar is convicted for the offence punishable U/s. 138 of the Negotiable Instruments Act in respect of cheque Ex.CW1/1 and Ex CW1/2.
26. Before parting with the judgment, it is relevant to bring on record the conduct of IndusInd Bank, Lajpat Nagar Branch, Ravissance House 1 st Ring Road, Lajpat Nagar IV, New Delhi-110024 now at G.K. - II, Delhi, which is highly condemnable as it has without taking proper details of its customer/accused and without taking the completely filled account CC No. 523560/2016 Madan Lal Suresh Kumar vs Sanjay Kumar Page 13 of 13 opening form/ KYC and without deposit of balance in the account issued cheque book to the accused, which he later misused. Such conduct of IndusInd Bank, Lajpat Nagar Branch, Ravissance House 1st Ring Road, Lajpat Nagar IV, New Delhi-110024 is highly reprehensible.
Digitally signed by (Announced in open SNIGDHA SNIGDHA SARVARIA Court on 03.10.2018 ) SARVARIA Date: 2018.10.03 16:34:17 +0530 (Snigdha Sarvaria) MM/NI Act-03/Central. 03.10.2018 Judge Code: 0530 CC No. 523560/2016 Madan Lal Suresh Kumar vs Sanjay Kumar